Tech stocks shake off panic over AI ‘doomsday scenario' where unemployment hits 10%

Core Viewpoint - The tech sector experienced a rebound after a significant sell-off triggered by a viral research report predicting a dystopian future due to AI, which could lead to unemployment exceeding 10% and a 38% drop in the S&P 500 by June 2028 [1][5]. Group 1: Market Reaction - The Nasdaq index rose over 250 points in midday trading, while the S&P 500 and Dow Jones Industrial Average increased by approximately 50 points and 250 points, respectively [1]. - The previous day, the Dow had dropped more than 800 points following the release of a 7,000-word essay by Citrini Research, which was described as a hypothetical scenario regarding a "Global Intelligence Crisis" [2]. Group 2: Research Report Insights - Citrini Research's essay envisions a future where AI leads to mass layoffs, particularly affecting white-collar workers, and predicts a significant economic downturn [5][7]. - The report suggests a negative feedback loop where AI advancements lead to fewer jobs, increased layoffs, and ultimately a crumbling economy [11][14]. Group 3: Expert Opinions - Prominent economists and firms, including Citadel Securities, have dismissed the report as conjecture, arguing that historical technological changes have not resulted in massive job losses or economic collapse [6][10]. - The acting chair of the White House Council of Economic Advisers characterized the report as "an interesting piece of science fiction," indicating skepticism about its economic validity [5]. Group 4: Industry Concerns - There is growing concern among investors regarding the high costs associated with AI development and the potential for private equity firms to struggle in realizing returns on their investments in the sector [10]. - Tech CEOs have also acknowledged that AI could disrupt the job market, with predictions of unemployment rates potentially reaching 20% in worst-case scenarios [14].